A Tragedy of the Clubs: Excess Entry in Exclusive Coalitions
42 Pages Posted: 31 Mar 2000
Date Written: July 1999
We model club formation as a non-cooperative game of coalition formation and surplus division. We show how social norms and individual rationality sustain a particular form of collective inefficiency, namely excessive entry in the joint production and exploitation of an excludable good. We term this phenomenon the "tragedy of the clubs". The tragedy of the clubs is a pervasive equilibrium phenomenon.
Keywords: clubs, coalition formation, multiperson bargaining
JEL Classification: C78, D71
Suggested Citation: Suggested Citation